Wednesday, December 05, 2007

The Right Direction for Health Care

The debate about health care seems to follow a common pattern: The debate starts with people complaining about something. When the complaints hit a shrill pitch, a progressive steps in and says the answer is a new government program and greater centralization of the health care system.

To get the debate turned around, we need to start the debate by talking about positive trends in health care. If people talked about the positive trends, the public at large would end up favoring less centralization and greater control over their personal health.

My contention is that the best way to handle health care is to get the insurance companies and government out of picture and to let people have direct personal relations with their health care providers. By making a direct contract with the health care professional, the person needing health care will receive better, more personalized service.

One of the most interesting examples of direct personal relations with health care providers is a new trend in the birthing process called the Doula. A doula is a person who works with expectant moms through the pregnancy, birth and post partem process. A doula is not a midwife. A doula might best be described as a lay person who provides support for the mom. The doula is concerned with what the mom is eating, how she feels and is available for the very necessary hand holding that needs to take place in the process.

A doula is a trained professional. Hiring a doula has proven has direct benefits. For example the use of doulas in the birthing process has been shown to decrease the need for cesarian sections by half and to decrease the need for forceps in birth, etc..

Because doula services depend on a more personal connection between the caregiver and patient, they tend to be small businesses and sole proprietorships. As with other small business, doula services tend to have extra offerings to help make ends meet. Michelle Scharf of Kaysville provides an interesting examples of the directions a person might take their doula business. Michelle adds massage therapy and birth photography to her bag of tricks.

The primary offering of doula services is time. Hence, the cost of services is generally the cost of labor with some additional training. Nicole of Denver is a newly trained doula and is currently offering discounted services as she works to extablish a reputation.

We tend to think of health care providers as things that come from another planet. The grandiose health care schemes of Mitt Romney, Hillary Clinton and the like are all premised on the idea that health care is some sort of limited resource that must be rationed.

The super dynamic doula industry shows the real nature of health care. Health care is about people serving the needs of other people in the community. In the doula industry we see caregivers entering and dropping back to other professions as supply and demand waxes and wanes.

Health care is the quintessential local business. 90% of quality health care is time and effort. The doula sits there with the mom helping her make the decisions, prepare for birth and to deal with the new infant and post partem depression. This is a lot of very valuable work. The work, however, comes from the community served. In a free society, that money stays in the community. The costs of the doula services simply reflect prevailing wages. So, its not like there will be a community that can't afford the services.

NOTE, in both socialized medicine and employer based insurance, the money leaves the community, goes to the center of power, then trickles back into the community. Only some 60% of the resources spent on such schemes managed to make it back into the community.

Birthing services, by the way, are one of the greatest failures of the insurance industry. Insurance companies are prone to treat pregnancy as a pre-existing service and deny claims to new policy holders. On the reverse side, juries are known to reward outrageous sums to people who lose children at birth. So, the insurance agencies wham doctors with malpractice premiums that triple the cost of care.

The insurance industry reams expectant moms in two directions by systematically denying claims and pushing up costs to the point that basic care causes extreme financial duress for new families when their claims are denied.

The doula industry is shows how health care should work. People from the community freely work with people in the community to provide care. This stands in stark contrast to the bastardized health care that gets provided when government, politicians, lawyers, insurance companies and other bureaucrats get involved.

3 comments:

Doula are all nice and good but that is not where the health insurance costs are coming from. When you can sit down and pick out a doula then this idea of personal health account or whatever you want to call them works out fine.

BUT when you have cancer or get pneumonia or get in a car accident then all these happy fantasies go right out the window. That is where the insurance costs are and no amount of direct access to a provider will keep a person out of financial trouble if one of the above scenarios happens. Instead you are going to be ten feet deep in medical payments and there is no way a personal health account is going to even begin to cover the costs.

There was a WSJ article about how even with insurance regular people are being hit by the caps. You should really go read the article.

And I am sorry that I complain about my mom not having health insurance, see she owns her own business, works easy 60+ hours a week and yet can't justify paying the 600+ dollar a month premiums just for catastrophic, that is half her mortgage payment for health coverage with a 3000 dollar deductible. I'll let my mom know that according to you she should really just suck it up and stop complaining.

I did not say that the doula model was the answer to all health care concerns. I put it forward as an example of a group moving in the right direction. It is a group of very dedicated people who are providing superior care at a lower cost in one small area of health care.

The WSJ article is interesting. It shows how people with massive amounts of coverage are being messed over by the health care bureaucracy when it comes to receiving care. The hospital quickly burned through $1.25 million coverage. The patient now must pay out of pocket and is finding himself billed $720 for a $12 pair of stockings, and loads of hidden expenses. The machine churned about $2,000,000 in the care of this one patient, but probably only provided $500,000 in real service. The article confirms my belief that the machine is wasteful.

Your mom's experience is interesting. I used to do actuarial analysis. The reason your mom can't justify buying insurance is that the whole thing is a rook. In your mom's case, the expected return for her insurance investment is somewhere from 50% to 70% of her premium. That is, she would spend about $600 a month, but only get $300 a month in real service. A person with business savvy balks at the numbers. I would not intentionally invest in such a losing venture.

Even worse, the insurance demands that she consume time dealing with the insurance agencies and claim adjusters to use the product.

BTW, if a worker were setting aside $600 a month for health care expenses in an interest free account, they would end up with about $300,000 to spend on health care. If they put the money in an interest bearing account, they would end up with well over a half million dollars.

That half million in real money would probably have purchased the same care that the victim the WSJ story received before being capped by his insurance.

Families that are paying $2k a month in premiums would actually have several million to spend on health care if they controlled the money themselves.

Medical care IS a limited resource because of the government. The government controls how many of which kind of doctor can graduate from which medical university each year. It controls how many of what kind of medical facility can open in which community. So yes, thanks to government meddling, medical care is a limited resource. But it doesn't have to be that way.

What Marshall's mom needs is catastrophic insurance that covers unexpected and expensive health problems. This kind of insurance in analogous to liability insurance. We require liability insurance on automobiles. But we don't insure our cars for oil changes, tire replacements, and other regular maintenance. Experience shows that when we insure for run of the mill expected health issues, we drive the cost of medical care up.

Health savings accounts are a good way to go if they are properly designed. My employer's HSA offering is little more than a tiny savings plan coupled with the exact same insurance plan with a somewhat higher deductible.